Another missed opportunity for city to take on Comcast

Posted: March 29, 2015 - 3:01 AM

Jeff Gelles, Inquirer Columnist

Comcast won an FCC ruling on rate caps as the city chose not to act. (RON TARVER / File)

As Philadelphia faces its once-in-15-years franchise renewal talks with Comcast, you may be worried that city officials are just a little too cozy with Philly's 1st Corporate Citizen - a reasonable concern after I reported last week that the mayor's office has been sitting on a report likely to embarrass the company.

Well, here's one more reason to fret. Just as complaints about Comcast's customer-service flubs were boiling over publicly this winter, the company quietly won certification from the Federal Communications Commission that all four of its Philadelphia franchises were subject to "effective competition."

That designation - granted on Jan. 26 without challenge from the city - frees Comcast's franchises here from the last remnants of rate regulation: caps on charges for equipment and basic cable.

Effective competition? Before you stop laughing, here's something to bear in mind: The FCC's definition, adopted more than two decades ago after one of Congress' many zigzags on cable policy, may not measure up with yours or mine. Or, say, English.

For example, federal law says a cable company can claim that satellite services provide effective competition if they offer "comparable video programming" and serve at least 15 percent of a market's households.

This is where weak goes to laughable. Under a 1993 FCC rule, all the satellite service must offer to prove "comparable video programming" is a dozen channels, including at least one that's not broadcast television. DirecTV and Dish Network have long offered much more.

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Were the city's hands completely tied? So suggests mayoral spokesman Mark McDonald. He says the city performed "considerable due diligence" on Comcast's petition, and decided it wasn't worth a fight. "Our view was that Comcast's petition would be granted whether or not the city opposed," McDonald said.

Still, about one in 10 cities does push back, at least buying a little time despite a crazy standard. Comcast won an "effective competition" label in Boston in 2002, when RCN Telecom Services was rolling out service.

When RCN pulled back, Mayor Thomas Menino got the competitive designation reversed. Comcast has been trying since 2012 to win it back.

Why did Comcast take so long here? Spokesman Jeff Alexander declined to discuss the issue, except to say that "marketplace forces and consumer choice ensure that pricing is reasonable" and that competition provides a wide range of choices in the city. "Competition and choice protect consumer interests better than regulation," Alexander said.

Some Philadelphians might question the reasonable-prices notion. Comcast's latest increase here, a 3.4 percent boost announced in December, once again far outpaced inflation.

But there's another reason Comcast may have had to wait: For years, it depressed the satellites' market here - and any real choice for sports fans - by using a legal loophole and hard bargaining to keep SportsNet, and most Phillies, Flyers, and Sixers games, off the satellites.

As these issues all show, cable companies, monopolies or duopolies almost everywhere, aren't like other businesses - something Congress or the FCC should recognize and address. Still, Common Cause's Todd O'Boyle says the city punted by not fighting the designation of Philadelphia as competitive.

"If anything, it would have been an opportunity for the city to highlight the dire state of affairs - just how lackluster video competition is," he says.

Consumer dissatisfaction with what Comcast portrays as vibrant competition will likely show up in the city's "needs assessment" - once it sees the light of day. It includes a survey of Comcast customers and nonsubscribers - and asks questions on broadband Internet, a key service the satellites can't offer.

McDonald, who says the city showed Comcast a draft of the report only as a courtesy, blames the delay on the "administrative process." Council responded by calling for public hearings on the franchise negotiations.

That bargaining offers another chance for Philadelphia leaders to step up. As Comcast itself repeatedly makes clear, this isn't personal. It's just business. The city is our agent at the table. Let's hope it doesn't punt again.